I find it difficult to avoid increasing awareness of economics nowadays. That’s especially true since I retired and our superannuation savings were flipped into income phase leaving us exposed to the vagaries of the financial markets. Being in the markets didn’t seem so bad while I was working and had an income stream adding to superannuation. Now things are running the other way and we need to be drawing enough to live on while hoping for enough growth to ensure that we can do that for as long as necessary. The market correction in late January was not what I was wanting to see so early in retirement.
Retirement aside, it has been difficult to avoid thinking about economics since at least the disruptions of the dot.com crash and the GFC. The news is full of it with some widely divergent views about the causes of apparent problems and potential solutions. The Emma Alberici story in recent weeks is just one example of the gulf between those who favour tax cuts for business to fuel trickle down and those who see that as simply adding to the already growing inequality between rich and poor. Stories about low wages growth and wealth inequality appear frequently in the media.
I read these stories and those about the interaction of economics and politics but cannot claim to be informed on either subject. From where I sit there seems little reason to expect that adding to the already full coffers of the top end of town will cause them to overflow and trickle down. The rich are already spending as much as they need and seem to have no difficulty finding places to stuff any excess wealth. On the other hand it seems to make more sense that money made available to those with little will be spent quickly on necessities and create more economic activity that should benefit everyone. For all these reasons it’s time I learned a bit more about economics and retirement should allow me time to read more in that area.
Not surprisingly, given the source, the book argues that Marx was largely right but has been misinterpreted and misapplied. His big picture argument is that over the past couple of centuries we have experienced a series of four economic waves on a period of about 50 years. They have been marked by the rise of the factory system and steam power; communications by rail, telegraph, and steam ships; electricity and mass production; and electronics and automation. We are currently stalled at the beginning of a fifth wave driven by networked information. Mason argues that the difference with this wave and the reason for the stalling has to do with the (near) zero marginal cost of goods based on information and the effects of neoliberalism which has dominated economic thinking over recent decades. One effect has been the atomisation of society (Margaret Thatcher claimed “there is no such thing as society“), including the destruction of organised labour resulting in increased inequality as wages stagnate.
His analysis seems to match what we are seeing in the economy but he goes further to argue that we are seeing the end of capitalism in a change equivalent to that which took us from the feudal system to capitalism. In his view, the solution to our economic malaise is to accept that we have reached, or are reaching, the end of capitalism and begin to transition to a new system. A key driver is the effect of networks and information on the marginal cost of production which will produce abundance of essential goods and services with reduced need for labour.
Does Mason have a solution? His argument is plausible but whether his plan for transition can be implemented is less clear. I’ll need to do more reading before I can get my head around some of the details and think about what steps we might take.